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  1. #1

    Default Should My Parents Put My Name on the House Deed/Title?

    My question involves real estate located in the State of: Virginia

    If so, how should the deed be held? Joint tenancy or fee simple or other?
    So my parents decided to buy a house for my sister and I for college as we go to the same school. I worked with a buyer's agent to buy a house (my parents don't understand English well). I chose the house and my parents and I signed the papers (of course I explained everything to them). The down payment is 50% and the mortgage is being payed by my parents.

    I did some research and found some pros and cons.

    "With their name on the title, it creates a credit history for them. If the student is working and generating taxable income, then some tax benefits would accrue to them that they wouldn't have if they were paying rent. And they might be able to exempt the capital gain on the resale if the student lives there for two of the past five years before they sell it," Sirkin says.

    Under 26 U.S.C. 121 an individual can exclude up to $250,000 ($500,000 for a married couple filing jointly) of capital gains on the sale of real property if the owner used it as primary residence for two of the five years before the date of sale.
    So lets say I live in the house for the next 3 years. Then I do my residency for two years in another state. If I sell the house after that, I can still exclude up to $250,000 right?

    If the child has debts, collectors can go after the property.
    (I'm not too worried about this scenario as I only have government student loans.)

    If the child is on the title, they can be sued for their portion of the house.
    (I somehow I was sued, would it be better to have joint tenancy or fee simple or something else?)

  2. #2

    Default Re: Should My Parents Put My Name on the House Deed/Title?

    My suggestion would be a joint tenancy with right of survivorship between you and your sister. If your parents are paying everything this will present a gift tax situation. It will also present a problem if you and your sister get into a disagreement. Therefore you may want to sign a separate contract outling your responsibilities. For example, what if she decides she wants three of her friends to move in. If that happens, call me.

  3. #3

    Default Re: Should My Parents Put My Name on the House Deed/Title?

    I just wanted to clarify that my dad's name, mom's name and my name would all be on the title. Does the gift tax still apply? Thanks for your responses so far.

  4. #4

    Default Re: Should My Parents Put My Name on the House Deed/Title?

    Then they are giving you one third.

  5. #5
    Join Date
    Mar 2005

    Default Re: Should My Parents Put My Name on the House Deed/Title?

    I believe the gift would be 1/3 of the down payment, and 1/3 of any contributions toward equity made afterward (contributions toward principal from the mortgage payments). It may be possible to structure that within the $12K/year gift tax exemption ($24K/year if mom and dad both make gifts and file a gift tax return). Of course, that doesn't work so well with a 50% down payment. It might also be possible for mom and dad to loan their child the money for their "share" of the downpayment, and forgive payments due under the loan (within gift tax exemptions). But it gets complicated pretty quickly.

    I very much agree with regard to a contract. I recommend a contract for pretty much any co-ownership of real estate that is not between spouses, covering when and how the property may be sold, buyout, payment of maintenance, improvements, responsibility for taxes, etc.

    I would suggest having an estate planning lawyer advise your parents, and help prepare any documents. They can probably find a lawyer who speaks their native language (or at least has a translator available), particularly if they seek referrals through their immigrant community.

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